Puma Sales Drop As Argentina’s Peso Takes Abrupt Dive

Footwear brand Puma is cautioning that external challenges are expected to persist throughout 2024.

“For 2024, we foresee the geopolitical and macroeconomic challenges as well as highly volatile currencies to persist,” said Puma CEO Arne Freundt in a Wednesday (Jan. 24) statement.

“This continues to weigh on consumer sentiment and demand, especially in the first half of 2024,” Freundt added. “While we cannot change these external factors, we continue to stay 100% focused on elevating the brand and bringing exciting product newness to the market.”

Puma reported that its early 2023 results took a hit due to a 54% drop in the Argentine peso in December. This led to a Q4 sales decline of about 4%, totaling around $2.16 billion, and a net income of $870,000.

For the entire year, sales saw a growth of 6.6%, amounting to about $9.4 billion. This matched the expected high single-digit growth.

“We are in a better position at the start of 2024 than we were at the start of 2023,” Freundt said. “We have cleared our inventories, we have a product pipeline with exciting product newness and innovations and we will launch our new brand campaign soon. We continue to stay hungry and have the ambition to continue to grab market shares.”

Looking ahead, Puma anticipates mid-single-digit growth in currency-adjusted sales.

The outcomes coincide with the actions of Argentina’s recently inaugurated president, Javier Milei, who intentionally devalued the peso by over 50% in December. This move, aimed at reshaping the economy, is acknowledged to pose short-term challenges but is deemed essential to address the country’s fiscal deficit and inflation.

Additionally, the results align with Nike’s announcement in December to enhance its $9 billion women’s business.

“Our women’s business has grown high single digits on average over the past three years,” Nike President and CEO John Donahoe said during an earnings call with analysts in December.

Donahoe emphasized that about 40% of Nike’s members are women consumers, and this segment is expanding, making up a growing share of new members. This trend suggests a growing demand per member. To seize this opportunity, Nike aims to enhance its offerings for these consumers in both performance and lifestyle categories.

Read more: Why Nike Says It’s Expanding Its $9 Billion Women’s Business

And while Nike aims to expand its women’s category, Donahoe emphasized during the call that the company will also persist in efforts to enhance efficiency — a broader strategy to reduce costs by approximately $2 billion over the next three years, reflecting a more conservative revenue outlook for the second half of the year.

The major athletic footwear company plans to streamline its operations by simplifying its product range, boosting automation and technology integration, and optimizing its organizational structure. The objective is to use its scale for improved efficiency.

The funds saved from these efforts won’t be idle; Nike plans to reinvest them to fuel future growth, accelerate innovation and ensure long-term profitability.

However, putting this plan into action comes with a cost — specifically, a price tag of $400 million to $450 million in pre-tax restructuring charges. Most of these charges are expected to happen in Nike’s current quarter, mainly linked to employee severance expenses. It’s a strategic move by Nike, aligning with its commitment to financial efficiency and adaptability in the shifting economic landscape.

During Nike’s earnings call in October, it was disclosed that although consumers were cautious about spending, the brand experienced robust sales through direct-to-consumer (D2C) channels.

During the call, Chief Financial Officer Matthew Friend highlighted a substantial growth in user engagement within the Direct business, showcasing elevated order values compared to the previous year.

See also: Nike Sees Strong D2C Sales Despite Consumers’ Discretionary Spending Pressures

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